How hard is it to actually become an MD?
We all know that it's tough to make the jump from VP/Director to MD. However, is it a common practice for people to switch to a smaller firm to become an MD? Like if someone is stuck at VP at a BB, can't they just transition to a MM with the expectaiton of performing well and then get promoted to MD?tldr: does the VP barrier actually exist? Or do people change life priorities (hence why they don't make it to MD and prioritize other things than work?
The jump from Director to ED, and then MD is tough. I’d say Director to ED is mostly about production, so if you’re winning mandates and are liked ED is achievable. However, MD at any respectable shop is stupid political to get to. You have to be connected, win mandates, be well liked by management, the fucking list goes on. A lot of people on here think MD’s just magically get there by grinding. That is 100% not the case. Making MD can be like hitting the fucking lotto honestly, the stars have to align for you. This applies to IBD and S&T. Make no bones about it, you may be brilliant, a producer, and well liked and you might not ever make MD
It’s a combination of luck / network / political skills. For most BBs you should not have a prob making it to D given the turnover in the industry. if you are lucky, some banks might even let you sail all the way to MD purely by executing on deals only. However, from then on you would need to generate revenue or show potential to bring in clients. This is why making MD is easier in BB then in EB as you always have balance sheet to support DCM activities + sponsors relationships at BB tend to be stronger (requires B/S). So if you r a coverage MD in say industrials you would benefit immensely from those existing relationships in sponsors
From what I've heard from MDs is that it's fucking brutal. You need to have the backing of the right people, be sitting in the right seat, and be generating more than your "class" up for consideration. Two of those metrics may be totally out of your control.
At that point, you're getting voted into a group that may (depending on comp structures, they're all different, don't kill me) have to give up some of their economics to have you in their group - so you're going to be held to a high standard.
I know this year, where I am, a few guys got turned down that I thought should have made it - just because the seats weren't there.
What happens if the banker can’t make MD? Is he eventually kicked out? And is the only practical option to go to a worse bank?
I don't think you're really "forced" to leave. Sometimes they'll be straight up and say it'll never happen, so they give you the option to leave. For some people, they don't even want to make MD, they're comfortable in an ED role. And for others, they want to move to a new bank and get that sweet, sweet title.
It's all a giant crapshoot from what I understand.
At Goldman they have this formal process called “cross ruffing” for MDs and an even more brutal version for Partners where a team interviews a bunch of senior people that you’ve worked with over the course of your career at Goldman. Stupid stupid political at least on the banking side, in addition to deal rev/production.
I assume other firms have similar processes depending on how more or less meritocratic they are.
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